On the Rebound: Slowdown Might Be Ending
Rismedia, Jan. 2 (MCT) - Led by a surge in the Northeast, home sales inched up across the United States last month in what industry insiders say is yet another sign that the year-long real estate slowdown may be ending.
The National Association of Realtors reported last week that sales of exiting homes in the Northeast rose 6 percent in November to an annual rate of 1.06 million. It was only the second increase in the past nine months.
In addition, the region's median sale price was up more than 5 percent to $269,000, the first increase since June.
"That makes me very optimistic," said Dan Shiver, president of the Passaic County Board of Realtors and owner of the Shiver Real Estate Agency in Paterson.
"The market has not crashed; it's just softened," Shiver said. "I think you're going to see some gains coming up next year. For lack of a better word, it's more normal."
The report came a day after the federal government reported a 3.4 percent gain in new home sales and a similar increase in the median price to $251,700.
Thursday's jump in the Northeast was more than enough to overcome sales that were flat or fell slightly elsewhere and produced a 0.6 percent increase nationally. Sales were up nationally in October as well, by 0.5 percent, making these the first back-to-back monthly gains since March 2005. Sales in October declined in the Northeast.
"It appears we've hit bottom," said David Lereah, chief economist of the Realtors association.
"As the housing market recovers from its correction, existing home sales should be rising gradually during 2007," Lereah said. "We've entered a more sustainable period of home sales now, and we expect greater support for prices over time as inventory levels are eventaully drawn down."
Total housing inventories fell in November by 1 percent to 3.82 million homes available for sale, the association said. That represents a 7.3 month supply at the current sales pace.
Even with the recent spurts, the market has not fully recovered from the past year's declines.
Sales are down 10.7 percent nationally and 4.5 percent in the Northeast from November 2005. Also, the median price is still down by 3.1 percent nationally and 2.2 percent in the Northeast from a year ago, following a decade of double-digit growth.
Statistics for New Jersey will not be available for a couple of weeks, but local real state agents say they are seeing a rebound.
"The business is there, but it's a little slower than usual," said Robert White, executive vice president of the Eastern Bergen County Board of Realtors in Palisades Park.
"Prices are holding fairly steady or rising a little bit," White said. "It's not as dismal as it's been portrayed nationally in the media. It's taking a little longer, but if they are appropriately priced at the onset, they are moving."
Having prices down from their high point is good news for consumers, Shiver said. "More people can afford to get into the marketplace, and there's more selection," he said.
Ara K. Hovnanian, president and chief executive of Red Bank-based Hovnanian Enterprises Inc., one of the nation's largest home builders, expressed similar guarded optimism in addressing investors two weeks ago.
"Over the past two months, we have started to see a glimmer of hopeful indicators that the markets may be stabilizing, including modest declines in resale inventories, improving consumer confidence… and healthy levels of buyer traffic at many of our communities," he said.
"Thus, as we begin Calendar 2007, we are cautiously optimistic that some of our more challenging markets will begin to experience decreasing cancellations and an improved sales pace," Hovnanian said. "However, we may not get a good read on the market until the spring selling season begins in earnest."
Helping spark the recovery are mortgage interest rates that are near a 12-month low, said Pat VredevoogdCombs, president of the Realtors group.
"It's the first time since August of 2005 that interest rates are lower than a year earlier," Combs said. "This is increasing buying power at the same time that sellers are showing a willingness to negotiate price and terms."
"Combined with a plentiful supply of homes on the market, there's a window for buyers now with conditions that we haven't seen since prior to the beginning of the housing boom in 2001."
Copyright © 2006, The Record, Hackensack, N.J.
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